A. M. Post:

Teal Lily
Carol Robinson

1. Sun Tzu said: The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.

2. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.

3. Thus the good fighter is able to secure himself against defeat, but cannot make certain of defeating the enemy.

4. Hence the saying: One may know how to conquer without being able to do it.

5. Security against defeat implies defensive tactics; ability to defeat the enemy means taking the offensive.

On Insight: In this week's New Yorker, there is an article called The Eureka Hunt (abstract here) regarding the timing of good ideas. There's an interesting dichotomy that must take place. First you have to focus the brain's attention on the problem. Second, you have to back away from the problem to activate a particular part of your brain's cortical area (anterior superior temporal gyrus (aSTG). It's the part of your brain that searches for consilience!

Because of that "space" needed, one generally has insight upon the early part of waking or in the shower. I'll add blowing drying hair to that. It was interesting to read this yesterday, as I typically have insights precisely at these times. In fact, in working through thorny issues at work, it was important to me to have enough time in the 'process' (from start to deliverable) to subliminate on the issue as sometimes these insightful moments are ones where you really that you were faulty in your thinking on some matter.

A Modest Proposal: To NG's point about the bonuses...I had this thought upon waking this morning. It would seem reasonable to me for the government to levy a special 'assessment' on principals of a firm if through their mismanagement there is a required 'intervention'. In fact, if I were a stockholder, I would insist upon there also being some sort of assessment in the event that capital requirements are endangered. How would that work? (Warning--not well thought through)

• Bonus pools would be different for principals/non-principals with the qualification that if you are a non-principal, but your bonus is in excess of X% of the bonus pool, you would be considered a principal for these purposes.
• The bonus pool would have a 5 year look-back. In the event that capital requirements of the institution were to fall below statutory limits OR if the financial institution were to go aground and require government intervention, then the bonus pool would be tapped before the FED intervened and before the existing shareholders were diluted.

How would you ensure that the bonus dollars are available in such an event? These are financial geniuses right? There are a number of ways (these are not mutually exclusive):

• The principals would guaranty it;
• They could do holdbacks or treat it as deferred compensation;
• They could purchase a surety bond;